What if you were able to come out of this time of social distancing and economic crisis with a stronger and healthier financial life? What if you looked at this as an opportunity to take a little bit of your extra time each day to work on your finances?
Since it takes me about 35 minutes to drive to work in the morning and 45 minutes on the way back home, I have an extra 1 hour and 20 minutes of my day that I don’t have to drive while I’m working from home that I can use to accomplish something. This doesn’t even take into consideration all of the networking and social events that would usually take up some of my time throughout the week.
Obviously, your situation is different than mine (and probably a whole lot different if you have kids at home who would otherwise be in daycare), but I’m guessing that we all have at least a little extra time right now that we can dedicate to our personal finances.
It looks like we’re going to continue to practice our social distancing skills at least through April, and now is a great time to work on creating a better financial situation, so I’m giving you 30 days of stay-at-home personal finance wins throughout April.
Unfortunately, I understand that there are many who have (and who will) lose their jobs during this time of uncertainty and objectively will not come out on the other side of this with a stronger financial situation. Hopefully, many of these personal finance wins can help to lessen the blow and make things easier on them. On the other hand, I think that many of these wins are still relevant to those who are fortunate enough to be in a position to not have to worry about their job and their finances to help them build a healthier financial life.
Day 3: Request Forbearance
Mortgages
The biggest expense of most Americans is housing and not having to make your mortgage payment for a couple of months (or having a lower payment) could be a lifesaver for many right now. The CARES Act includes a provision which states that Federally-backed loans are eligible for 12 months of forbearance which begins with a 180-day waiver that can be extended. This has resulted in many lenders working with mortgage borrowers who are experiencing financial hardship related to the coronavirus to suspend or decrease their payments for the time being to free up cash flow and help to ease the burden. Additionally, many private lenders have begun extending forbearance to borrowers of their loans as well.
In order to receive a forbearance, borrowers need to submit a request to their loan servicer and attest that they’re experiencing financial hardship due to COVID-19.
While the true sense of a forbearance means that missed payments would be due in a lump sum once the period is over, many lenders are agreeing to treat this situation as a deferment and add the missed mortgage payments onto the backend of the loan. If this is something that you’re interested in pursuing, then you should be sure to understand the specifics of how the missed payments are expected to be paid back with your loan servicer. It’s also important to be clear on other terms of the agreement such as whether or not interest will continue accruing as well as if any payments are required during the forbearance.
Student Loans
Student loan forbearance has also been made available by the CARES Act through 9/30/2020 for loans that are held by the Department of Education. You’ll likely need to be proactive about logging into your account or contacting your loan servicer to suspend your payments for the time being. Not having to make student loan payments for 5 months could be another huge benefit for those who are struggling with cash flow.
Those who work for qualified nonprofit organizations and are planning on taking advantage of Public Service Loan Forgiveness (PSLF) should note that the CARES Act states that suspended months will count towards loan forgiveness programs. This obviously has a dual benefit in that those eligible for PSLF have another avenue to free up cash flow and save some money right now by suspending student loan payments and will also increase the amount of loans to potentially be forgiven in the future.
